Stock Analysis

Shareholders Will Probably Not Have Any Issues With Webster Financial Corporation's (NYSE:WBS) CEO Compensation

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Despite positive share price growth of 7.0% for Webster Financial Corporation (NYSE:WBS) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 22 April 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

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How Does Total Compensation For John Ciulla Compare With Other Companies In The Industry?

According to our data, Webster Financial Corporation has a market capitalization of US$5.3b, and paid its CEO total annual compensation worth US$3.5m over the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$995k.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$4.8m. So it looks like Webster Financial compensates John Ciulla in line with the median for the industry. Moreover, John Ciulla also holds US$6.8m worth of Webster Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$995k US$961k 29%
Other US$2.5m US$2.6m 71%
Total CompensationUS$3.5m US$3.6m100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. Webster Financial pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NYSE:WBS CEO Compensation April 16th 2021

A Look at Webster Financial Corporation's Growth Numbers

Webster Financial Corporation has reduced its earnings per share by 4.3% a year over the last three years. In the last year, its revenue is down 14%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Webster Financial Corporation Been A Good Investment?

Webster Financial Corporation has not done too badly by shareholders, with a total return of 7.0%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Webster Financial that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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